Broker Name: OCBC Investment Research
Date of Report: 24 July 2025

City Developments Ltd: Taking a Breather After Strong Rally—Comprehensive Investment Analysis and Sector Peers Overview

Overview: City Developments Ltd in the Spotlight

City Developments Limited (CDL), a prominent name in Singapore’s real estate landscape, has recently experienced a significant share price rebound, rising 40.5% from its year-to-date trough as of 23 July 2025. Despite this rally, OCBC Investment Research has downgraded CDL to a HOLD rating, maintaining a fair value estimate of SGD6.01.
CDL’s diversified operations span three primary segments: property development, hotel operations, and investment properties. The group is internationally active, with assets and ventures in Singapore, China, Japan, the UK, and the US. Notably, CDL has demonstrated agility in unlocking shareholder value through strategic divestments and the redevelopment of mature commercial assets in Singapore.

Investment Thesis: Positives Amidst Caution

Key points driving CDL’s current investment outlook include:

• Strong project launches in Singapore’s Core Central Region (CCR): Two recent launches—UpperHouse (301 units) at Orchard Boulevard and The Robertson Opus (348 units) in Clarke Quay—achieved robust sell-through rates of 54% and 41%, respectively, with average selling prices of SGD3,350 and SGD3,360 per square foot.
• Healthy performance in office and retail sectors: Core CBD Grade A office rents rose 0.4% quarter-on-quarter to SGD12.10 psf/month in Q2 2025 (+1.3% YTD), while islandwide prime retail rents climbed 0.7% QoQ to SGD27.50 psf/month, buoyed by recovering tourism and office crowds.
• Portfolio reconstitution: CDL recently announced the divestment of its 50.1% stake in the South Beach integrated development to IOI Properties Group Berhad for an agreed property value of SGD2.75 billion, a 3% premium to its latest valuation. This move is expected to lower gearing and potentially enable a special dividend for shareholders.
• ESG leadership: CDL continues to set benchmarks in sustainability, maintaining the highest ESG ratings and leading the sector with its net zero operational carbon pledge by 2030, and a whole life carbon net zero target by 2050.

Financial Highlights and Key Performance Metrics

Strategic Developments and Project Pipeline

• Upcoming project launches: CDL is preparing to launch Zyon Grand, a mixed-use integrated development at Zion Road (Parcel A) with direct MRT access, in 2H25. Additionally, the luxury Newport Residences at Anson Road, though launch timelines are currently delayed, is expected to benefit from the positive momentum seen in recent CCR launches.
• Portfolio streamlining: The South Beach divestment (SGD834.2 million consideration for CDL’s stake) underscores the company’s ongoing focus on capital recycling and balance sheet optimization.

ESG Leadership and Sustainability Initiatives

CDL has maintained top ESG ratings and is recognized for its proactive adoption of sustainable practices across its real estate portfolio. Key milestones include being the first real estate conglomerate in Southeast Asia to pledge net zero operational carbon by 2030 for wholly-owned assets and extending its commitment to net zero whole life carbon emissions by 2050.

Potential Catalysts and Risks

Potential Catalysts:

• Stronger-than-expected residential project sales.
• Faster-than-anticipated residential price growth in Singapore.
• Possible unwinding of property cooling measures.

Investment Risks:

• Macroeconomic slowdowns impacting consumer and business sentiment.
• Lower-than-expected margins on residential projects.
• Additional government property tightening measures.

Valuation Table: Comparing Sector Peers

Company Profile and Segment Review

CDL is a global real estate leader with a presence in 163 locations across 29 countries. Listed on the Singapore Exchange, CDL is one of the largest companies by market cap, with a diversified portfolio spanning residences, offices, hotels, serviced apartments, integrated developments, and shopping malls. Over its 60-year history, CDL has developed more than 50,000 homes and owns over 23 million square feet of gross floor area in residential, commercial, and hospitality assets worldwide. Its wholly-owned Millennium & Copthorne Hotels Limited (M&C) subsidiary operates 155 hotels in key global cities.

Income and Profit Breakdown (FY24)

• Revenue Contribution by Segment:
  • Property Development: 28.7%
  • Hotel Operations: 49.6%
  • Investment Properties: 15.3%
  • Others: 6.4%
• Profit from Operating Activities by Segment:
  • Property Development: 14.0%
  • Hotel Operations: 40.1%
  • Investment Properties: 43.9%
  • Others: 2.0%

Residential Sales and Dividend Trends

• Cash dividends per share (2016–2024): Ranged from 12.0 to 28.0 Singapore cents.
• Residential units sold in Singapore (2017–2024): Varied year-to-year, with sales value and number of units both showing fluctuations aligned with market cycles and project launches.

Detailed Financial Results and Ratios (FY20–FY24)

Conclusion: Outlook and Recommendation

While CDL’s fundamentals remain solid with a diversified, income-stable portfolio and a clear focus on sustainability, OCBC Investment Research recommends a HOLD at current levels. The recent share price surge has reduced upside potential in the near term, and investors are advised to monitor macroeconomic conditions, government policies, and upcoming quarterly results for further direction.
This comprehensive analysis includes a detailed comparison with sector peers, providing investors, analysts, and market watchers with an in-depth perspective on CDL’s strategic positioning, financial performance, and future prospects.